Pa. Lottery privatization contract to be revised

Saturday

Mar 16, 2013 at 12:01 AM

HARRISBURG (AP) — Gov. Tom Corbett said Friday his administration will revise a contract with a British company to manage the $3.5 billion Pennsylvania Lottery in an effort to win approval from Attorney General Kathleen Kane, an avenue that for now avoids a court battle.

HARRISBURG (AP) — Gov. Tom Corbett said Friday his administration will revise a contract with a British company to manage the $3.5 billion Pennsylvania Lottery in an effort to win approval from Attorney General Kathleen Kane, an avenue that for now avoids a court battle.

Corbett's office, in a statement released Friday evening, said revising the contract with Camelot Global Services will provide legal clarity to Kane and her office, which rejected it last month over concerns that parts of it contravene the state constitution or violate state law.

The Department of Revenue will submit a revised contract to Kane's office in the "upcoming months," the governor's office said, but did not provide any details on how it would revise the contract with Camelot, the United Kingdom's official lottery operator. An agreement with Camelot extends the company's bid from today through June 30, the governor's office said.

Kane had said she would not approve Camelot's 20- to 30-year contract because state law does not allow the governor to privatize the management of the lottery nor does it allow the expansion of gambling that the contract would permit. Her office also concluded that the "indirect expenses" that Camelot can claim under the contract are an unconstitutional waiver of the state's "sovereign immunity" protection against paying certain damages or claims.

The attorney general's office reviews state contracts for form and legality.

On Tuesday, Senate President Pro Tempore Joe Scarnati told The Associated Press that administration officials had said they were making changes in the contract to address concerns by Republican senators about the scope of gambling that would be allowed under the contract. Senate Republicans, including Scarnati, had asked Corbett's administration in January to make it clear that the Pennsylvania Lottery cannot compete with casinos through online gambling.

However, the head of the union that represents lottery employees, David Fillman, has said that making changes to the contract at this stage is a dangerous path that could trip over state laws meant to ensure a fair contracting process for other potential bidders.

Corbett has said he believes Camelot, the United Kingdom's official lottery operator, can produce higher and more stable lottery profits for the state. Democratic lawmakers have criticized Corbett as diverting money from programs for the elderly to a foreign firm at a time when the state employees who run the lottery are achieving strong gains in profits and sales and keeping overhead low.

Currently, profits from the 41-year-old Pennsylvania Lottery benefit programs for the elderly, including transit, rent and property tax rebates, prescription drug assistance, senior centers and long-term care services. Two other states, Indiana and Illinois, have hired private lottery managers, while New Jersey is moving in that direction.